Hong Kong shares edged up on Thursday, helped by bank and property stocks, which had been sold heavily in recent sessions, but strength in defensives and low volumes suggest that investors are still risk averse. China Overseas Land & Investment Ltd were among the biggest gainers on buying by long-term funds in anticipation that Chinese authorities may ease policy after Wednesday's manufacturing data came in worse than expected.
"Some long-term funds started to buy Chinese property stocks today. There's an anticipation that policy will be loosened soon," said Hong Hao, a global strategist with CICC. The Hang Seng Index closed up 0.4 percent at 17,935.1 points. The benchmark is down more than 3 percent on the week, poised for its fourth weekly decline. It is down 9.7 percent in November to date after gaining almost 13 percent in October.
The index is expected to be supported between 17,737-17,782 in the near term, with its 61.8 percent Fibonacci retracement of its rise from the October 4 low to October 28 high, and the lows on October 12 and 20 forming the range. China Overseas Land gained 5.6 percent on Thursday, but is still down more than 15 percent in November to date. Short selling interest in the stock has stayed high in the last few months, averaging 19 percent of turnover in the first three days of this week.
China Overseas Land's 12-month forward earnings multiple has dipped to its lowest in at least the last 10 years, according to Thomson Reuters Starmine. But at 6.8 times, it is still higher than its peer, Agile Property Holdings Ltd, with a 12-month forward P/E of 2.6. Agile shares surged 13.3 percent in almost twice its 30-day average volume. Gains in financial and property names also helped the Shanghai Composite Index snap a six-day losing streak, edging up 0.1 percent at 2,397.55 points in weak A-share turnover.
Shares of Chinese property developers, which have come under pressure with swirling uncertainty over physical demand and prices, were broadly firmer. Poly Real Estate gained 2.9 percent. The Shanghai financial and property sub-indices were relative outperformers, gaining 0.6 and 1.1 percent respectively, with China Life Insurance the Shanghai Composite's top boost, gaining 3.3 percent. A senior banker said in Beijing on Thursday that China could cut reserve requirements for all banks in the first quarter of 2012, adding to talk that a fast-cooling world economy may lead Beijing to relax monetary policy.
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